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Business school leaders are calling on the government to change the policy on student visas to make Britain a more attractive place following a sharp decline in international students taking business courses.

One third of all international students in UK universities are studying in a business school. However, last year’s intake from outside the European Union fell sharply by 8.6%, according to the latest figures published last week by the Chartered Association of Business Schools, or CABS, in a new report.

Professor Simon Collinson, chair of the Chartered Association of Business Schools, which describes itself as the voice of the UK’s business and management education sector, said: “Although our business schools remain competitive and our universities are among the best in the world, international students are choosing other countries for their education because our immigration regulations make this country difficult, or unattractive, to enter.”

The drop in numbers on the most popular course at university is also threatening a vital lifeline for higher education institutions, because the income made in business schools often subsidises other subjects and faculties where universities run at a loss, the report says.

International students studying business contribute £2.4 billion (US$3.4 billion) to universities and the UK economy, the report says, but their numbers are in decline.

The issue is most acute on postgraduate taught programmes, such as the MBA, where 52% of students are international. These talented students “help to create a diverse global experience on campus and as future entrepreneurs and business leaders they provide immeasurable value to the UK”, the report says.

University courses in business and administration are very popular in the UK and business schools teach nearly one in five of all university students. The UK has excellent business schools, with 15 ranked in the world’s top 100 by the FT Global MBA rankings, the report says.

Despite this, business school leaders interviewed for this new report say prospective international students are being turned off by Britain’s post-study work visa restrictions and choosing other countries to study instead.

One business school dean said “the UK as a destination has become less attractive than the US, Canada or Australia – this is largely the consequence of post-study work visa issues”. Another commented that “increased forecasts for student recruitment to the UK is la la land”.

Professor Collinson said: “In 2014-15 we experienced the sharpest decline of international students starting degree programmes in UK business schools. This report shows how this is damaging, not just for business schools and the universities that rely on their income, but in terms of the jobs and communities beyond our universities that are supported by the income from international students.

“Not only are we turning away investment, we are turning away international talent. These skilled, entrepreneurial and globally mobile students are the leaders of tomorrow and the UK’s immigration policies should be designed to attract them so that our universities and our economy can benefit from the diversity and added value they bring.”

Visa rule changes

In March 2011 the government announced its policy to tighten visa regulations for international students seeking to work in the UK after graduation. Key features of this policy included the introduction of requirements for international graduates to have found an employer within four months of graduation who is willing to offer them a graduate job with a salary of at least £20,000 (since increased to £20,500) and to ‘sponsor’ them.

Students who want to set up a business in the UK can apply for a ‘Graduate Entrepreneur’ visa and will need their university to ‘sponsor’ them.

The government also toughened up the rules on English language competence, insisting students have an upper intermediate level of English. Evidence shows this policy, and how it is perceived by prospective students abroad, is having a negative impact on business schools’ ability to recruit international students, the report says.

Coupled with increased competition for international students from institutions abroad, the decline in non-EU students also has a detrimental effect on university finances and the regional economies around them, the report added.

The figures for non-EU first year students studying business and administration during the years since 2011, however, paint a more complex picture than a clear correlation between recruitment and visa measures, because they have fluctuated – rising from 62,430 (2010-11) to 64,675 (2011-12), then falling to 63,720 (2012-13) before rising to 65,825 (2013-14), then falling to 60,190 (2014-15), bringing numbers down below the 2010-11 level for the first time since the restrictions were introduced.

This raises the question of whether other factors such as increased competition are having a greater impact than visa restrictions, or whether it is the reporting of the visa issue – a frequent occurrence in the media in recent years because of the intensity of the ongoing political debate about the number of migrants in the country – that is deterring potential recruits.

The CABS survey of business schools found that 90% definitely or mostly agree that "reporting of government policy has had a negative impact on international student recruitment". This compares with just over 70% strongly or mostly agreeing that "support for business schools in other countries by their governments has made them more attractive to international students".

Sector support

The report has received support from key university and business bodies including the Confederation of British Industry or CBI; Universities UK, which is the vice-chancellors’ body; and the UK India Business Council.

Neil Carberry, director of employment, skills and public services at CBI, said educating the world’s top talent is a growth opportunity for the UK that it must capitalise on. Encouraging international students to study at our leading business schools and universities has benefits for local economies and in building our global links.

“It is also in our national interest to encourage the brightest and best to stay and work here where they have skills that are not readily available within the domestic labour market. We must ensure we harness the strengths of international students, including by developing a robust visa system which is not a barrier to studying at our great business schools.”

Nicola Dandridge, chief executive of Universities UK, said that despite growing demand for quality higher education across the world, international recruitment figures in the UK over the past few years have not done justice to the world-class reputation of the UK’s universities and business schools. At the same time, competitor countries have seen rises in international student numbers.

“International students and staff make an enormous contribution to the UK, academically, culturally and economically. If the UK wants to fulfil its potential in this growth area, it must present a welcoming climate for genuine international students and academics and ensure that visa and immigration rules are proportionate and communicated appropriately.”

Richard Heald, CEO of the UK India Business Council, said the UK has long been a major destination for the large numbers of Indian students who study overseas.

“These highly skilled individuals make a significant contribution to the finances of UK higher education institutions, especially those offering business related postgraduate courses. The decline in the numbers of these students should be a cause for concern and any link to changes in the conditions around post-study work visas, whether perceived or otherwise, should be addressed as a matter of some urgency.

“The experiences of Indian students in the UK is an important facet of the trade and investment relations between the two countries,” he said.

Fees for international students at business schools range from £10,000 to £60,000. However, a business degree comes with a higher than average earning potential of £28,000 for a graduate entering employment for the first time and MBA graduates from the UK’s highest ranked business schools can earn an average of £127,000 per year three years after graduating, equivalent to a 90% increase in their salary.